Heartburn Drug Prevacid to Be Sold Over the Counter in 2009

December 20, 2005

CHICAGO _ By the end of the decade, consumers should have another prescription-strength option to treating heartburn that won’t burn a hole in their wallets.

TAP Pharmaceutical Products Inc. has agreed to license rights to its blockbuster heartburn drug Prevacid to health-care giant Novartis AG, which plans to launch an over-the-counter pill once the patent on TAP’s prescription version expires in 2009.

This is expected to be good news for millions of heartburn sufferers who may be looking for a cheaper and just-as-effective option to expensive brand name drugs like prescription strength Prevacid and Nexium _ pills that cost about $4 a pill on average at retail prices. An over-the-counter version is expected to cost less than $1.

Prevacid is the nation’s fourth-best-selling brand name prescription in the United States, trailing heartburn rival Nexium, No. 3, and cholesterol-lowering drugs Zocor and top-seller Lipitor.

Prevacid would be the second of the heartburn treatments in the popular proton-pump inhibitor class to seek over-the-counter status. A 20-milligram version of Prilosec, known as the “purple pill,” went over-the-counter in late 2003 and sells these days for about 80 cents a pill or even less depending on discounts and sales at retail outlets.

Novartis would not say what it will sell Prevacid for but industry observers expect its price to be near that of Prilosec given the two treatments are so similar in efficacy and safety. Novartis plans to make Prevacid “one of the top five OTC products in the United States,” said Larry Allgaier, chief executive officer of Novartis Consumer Health.

“We have the experience and a proven track record in switching drugs from Rx to OTC,” Allgaier said. “We’re excited about making Prevacid _ a brand that people know and trust _ even more accessible to patients in the future.”

All proton-pump inhibitors on the market similarly treat gastroesophageal reflux disease, commonly known as GERD, as well as more serious acid-related disorders. In fact, even studies funded by the drugmakers themselves have shown prescription strength Prilosec, Nexium and Prevacid to be therapeutically equivalent, according to the drugmakers and their studies.

Therefore, a second proton pump inhibitor going over-the-counter might further put a dent in America’s bill for prescription heartburn treatments as well as drugmaker profits.

In 2004 _ the first full year Prilosec OTC was on retail store shelves _ U.S. sales of prescription proton pump inhibitors fell 4 percent to $12.5 billion from $12.9 billion in 2003, according to market research firm IMS Health.

TAP will continue to market and sell prescription Prevacid until at least 2009 when the compound patent expires.

Novartis will take on a “multiyear OTC” development initiative that includes clinical trial design, product development activities such as regulatory submission to the Food and Drug Administration, manufacturing, product launch and distribution, the companies said. Novartis will eventually submit the lowest dosage, a 15-milligram version, of Prevacid to the FDA for approval, TAP said.

Financial terms of the deal were not disclosed but TAP said it will use some of the proceeds from the licensing deal to fund future research and development initiatives.

TAP is hoping to find ways to replace the $2.5 billion in annual net sales Prevacid generates by the time the drug’s patent expires. TAP is a joint venture of North Chicago-based Abbott Laboratories and Japan’s largest drugmaker, Takeda Pharmaceutical Company Ltd.

“This agreement allows TAP to maximize the value of its Prevacid franchise while also focusing on future novel compounds to treat acid related disorders,” said TAP President Alan MacKenzie.

But TAP will likely generate far fewer sales from sales of an over-the-counter Prevacid even if it is as successful as OTC Prilosec. Neither TAP nor Novartis would comment about sales projections for OTC Prevacid.

OTC Prilosec distributor Proctor & Gamble Co. had projected $200 million to $400 million in sales for its first year on the market. It generated $135 million in sales in its first six months on the market and appeared to be on pace to meet or exceed its 2004 goals. Proctor & Gamble would not disclose annual sales figures for that year or whether it met its projections.